This research explores current trends and causes of inequality in the Federal Republic of Germany. Two forms of inequality include: 1) economic inequality which describes the income and wealth gap between the poorest and wealthiest individuals in a country; and 2) social inequality which describes the differences in opportunities and rewards based on racial, gender or ethnic categories. Liberal market economies like the United States are assumed to have the highest levels of inequality among advanced industrial countries. However, the European Union and its strongest economy, Germany, has seen a rise in inequality. The richest 10% in the country currently own assets amounting to 1.4m euros on average, 80 times more than the annual income of the median German household. Earlier this year, the German Economic Institute (DIW) released a study indicating that contrary to common conceptions, Germany had the most unequal distribution of wealth in the eurozone.

Rising inequality in Germany is correlated with a rise in neo-nazi groups that look to spread xenophobia across Germany. The aim of this research is two-fold: first, drawing on OECD data, the paper describes the current level of inequality within Germany, and between Germany and the rest of the EU. And second, the paper offers historic evidence that current levels of intra-German inequality are a function of the economic and social merger of the two Germanies during and after the fall of the Berlin Wall. The authors conclude a rise in inequality in Germany is a direct result of the reunification process.